Enron Officials Snub Congress

Enron Officials Snub Congress

By Marcy Gordon

Dec. 11, 2001 | WASHINGTON (AP) --

Enron Corp., whose stunning collapse is being investigated by federal regulators and Congress, is declining to send any officials to a hearing Wednesday by two House panels.

"I don't think they want to, or are not prepared to answer some very pointed questions about what went wrong," Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, said Tuesday in a telephone interview.

The hearing is being conducted by two subcommittees of the panel. Joseph Berardino, chief executive of Big Five accounting firm Arthur Andersen LLP, which was Enron's longtime auditor, and Robert Herdman, chief accountant of the Securities and Exchange Commission, are appearing as requested by the lawmakers.

Asked whether the committee planned to issue a subpoena to Enron officials to compel an appearance, Oxley said that would not happen immediately. However, he added, "We can certainly contemplate that at a later date." Additional hearings are planned on the subject.

Wednesday's inquiry is designed to help Congress and the public "understand as best we can what structurally went wrong, what mistakes were made and what mistakes were not noticed," Oxley said.

Subjects to be examined include accounting practices by the company and Andersen, and potential securities law violations, and Enron's handling of its employees' 401(k) retirement investment plans, he noted.

At Enron's headquarters in Houston, spokeswoman Karen Denne said neither Chairman and Chief Executive Kenneth Lay, who was invited by the lawmakers, nor any other Enron representatives will testify Wednesday.

"We don't believe that we would be able to adequately serve the interests of the committee while at the same time we're trying to serve the interests of our creditors' shareholders, and former and current zmployees," Denne told Dow Jones Newswires.

The SEC is examining Enron's use of questionable partnerships that allowed the energy-trading company to keep half a billion dollars in debt off its books, and has issued subpoenas to Andersen related to its auditing of Enron's accounts. The company, which only months ago was the nation's seventh-biggest in revenue, has acknowledged that it overstated profits for four years.

Enron filed for bankruptcy protection from creditors on Dec. 2, following a six-week downward spiral, and also filed a billion lawsuit against smaller rival Dynegy Inc. for scrapping a proposed buyout. It was one of the largest corporate bankruptcies in history.

The company laid off about 4,000 of the 7,500 employees at its headquarters the day after filing for bankruptcy with a promise that each would receive a ,500 severance payment. At the same time, nearly 600 employees deemed critical to running its prized energy trading business received more than 0 million in bonuses last month.

Enron also is under investigation by the Justice Department and by the Labor Department for its handling of its employees' retirement benefit plans. Before filing its bankruptcy petition, Enron prohibited its workers for several weeks from selling stock held in voluntary retirement plans while the share price plunged.